AUD/USD retreats from 12-day top on mixed Aussie PMIs, US data, Fed’s Powell eyed

• AUD/USD consolidates recent gains around multi-day top, renews intraday low of late.
• Australia’s S&P Global Manufacturing PMI for May came in softer but Services PMIs rose past market consensus.
• Risk-on mood, hopes from new government previously favored bulls.
• US activity data, Fed’s Powell and headlines from Quad, as well as concerning China, will be important for fresh impulse.

AUD/USD holds lower ground near the intraday low after downbeat Australia activity data allowed the bulls to take a breather after refreshing two-week top. That said, the Aussie pair remains pressured around 0.7090 by the press time of the initial Asian session on Tuesday.

That said, Australia’s preliminary readings of the S&P Global Manufacturing PMI for May dropped to 55.3, versus 57.8 expected and 58.8 prior, whereas the Services counterpart improved from 52.2 forecast to 53.0, compared to 56.6 prior (revised). As a result, the Composite PMI also eased to 52.5 from 55.9 prior.

Also allowing the quote to pare recent gains is the downbeat prints of the S&P 500 Futures, printing 0.65% intraday losses by the press time, despite the Wall Street benchmarks’ gains.

Comments from San Francisco Federal Reserve Bank President Mary Daly seem to have triggered the latest risk-off mood. “I think that we can weather this storm, get the interest rate up...price stability restored and still leave Americans with jobs aplentiful and with growth expanding as we expect it to," said the policymaker during an interview with Fox News on Monday.

Previously, the risk-on mood joined a lack of bullish bias to drag the US Dollar Index (DXY) to a two-week low. In doing so, the US Dollar Index (DXY) extended the first weekly loss in seven as mixed covid signals from China, mostly positive, join the repeated Fedspeak around a 50 bps rate-hike, contrary to the recently hawkish comments from the ECB policymakers. Also weighing on the greenback were the headlines from Japan where US President Joe Biden mentioned that he is considering reducing tariffs on China. In addition to the softer USD, hopes from the Labour Party, as they retake control in Australia after nine years, also favored AUD/USD buyers earlier.

Moving on, risk catalysts like headlines from Quad Summit in Tokyo and covid updates from China can entertain AUD/USD traders ahead of the US preliminary readings of the S&P Global Manufacturing and Services PMIs for May. . Also, Fed’s Powell is always crucial to move the markets and can do so if refrained from the usual support for a 50 bps rate hike trajectory.

Technical analysis

A daily closing beyond a seven-week-old descending trend line, around 0.7070 by the press time, keeps AUD/USD buyers hopeful of challenging the monthly high surrounding 0.7265.